Group Commerce Has Laid Off 28% Of Its Staff

Updated 1:51 pm, Saturday, January 26, 2013

Group Commerce, an e-commerce platform for publishers that made its name in the daily-deal market, has fired 31 people.

The company confirmed the layoffs to Business Insider. The cuts amount to 28% of its 109-person staff.

"It was a tough decision," says CEO Jonty Kelt. "We had to split up our family here."

The employees were located throughout six cities and worked on everything from sourcing deals for publishers to operations; all were in the local services department.

"Sourcing" a deal is the labor-intensive process of approaching local businesses to run a discount or promotion—the kind of operation that Groupon, with its large local sales force, is known for.

Group Commerce will continue to solicit deals from national brands, and help distribute deals from companies like SignPost, which source deals and then use Group Commerce to get more reach.

Kelt says the local-offers business, which launched two years ago, was too much work for too little reward. Sourcing local deals is as much work as sourcing national deals, but yields far fewer sales because the offerings are relevent to a much smaller audience.

In addition, Group Commerce's publishers have become more savvy in sourcing their own local deals, and they relied on Kelt's team less and less.

"Our publishers were getting self-sufficient on their own," says Kelt. "And this is a good thing, we want our publishers to be successful in e-commerce."

A broader problem may be that Group Commerce is a supplier to daily-deal sites. But it only works well for mid-sized publishers. Larger daily-deals sites aren't likely to use it, and small publishers don't often have the resources or reach to take advantage of it.

But Kelt is optimistic about the future of his company. He recently hired people in the company's other departments. Group Commerce's revenue doubled last year. In addition, his team is working on a next-generation solution that will be rolling out in a few months. Kelt explains it as a "lighter-touch way for publishers to get revenue streams from e-commerce."

Instead of having to run offers manually, the solution will be more automated for Group Commerce's 23 publishers.

The tough week for Group Commerce is one Kelt hopes will make his company better in the long run.

"Everyone hopes and wishes to have a vision that always goes up and to the right, but in reality it's a squiggly line," says Kelt. "We're going to make mistakes and hard decisions, and things aren't always going to play out the way they should. But you have to recognize that and make the right call. It makes the company stronger."

Group Commerce was founded three years ago and has raised $39 million.